The Eu S Climate Change Package

IRISH TOURIST INDUSTRY CONFEDERATION

The E.U.’s Climate Change Package

Issues & Opportunities for the Irish Tourism Industry

This submission was prepared by

I.T.I.C. with support from

E.P.S. Consulting www.epsconsult.ie

May 2008

1 EXECUTIVE SUMMARY

 The targets for the reduction in carbon emissions contained in the EU’s climate change/renewables package will pose significant challenges for Ireland. The tourism sector is keen to engage with Government to ensure that we play our part in meeting these challenges. ITIC recognises that sustainable tourism is clearly the way forward and that climate change can also offer significant opportunities to grow and develop a more carbon neutral product offering. However, this will require a more strategic approach and the collaboration of all stakeholders to ensure that Ireland can position itself to take advantage of these opportunities going forward.

 The tourism sector recognizes that it is vitally important to protect the environment, and will work with Government to limit the impacts of climate change, to ensure that the sector develops in a sustainable manner.

 At the same time however it is important to remember that the tourism industry is of vital economic importance to the Irish economy. The industry was worth an estimated €6.5 billion in 2007, and the 17,000 small businesses that make up Ireland’s tourism and hospitality industry support employment for almost 250,000.

 There is some concern that the sector may be asked to shoulder an inequitable share of the burden, and that policy measures may be introduced without a full and thorough understanding of their economic impact on the sector.

 Ireland’s rising cost base, rising fuel prices and adverse exchange rate movements against the Dollar and Sterling have led to a deterioration in the sector’s competitiveness, at a time when competition from other destinations is increasing. We are obviously concerned that a number of the possible policy responses to climate change could lead to further significant increases in our costs.

 ITIC is specifically concerned about the possible introduction of a carbon tax and would only support its introduction if there is clear evidence that such a tax will actually reduce emissions by a verified amount; that the tax is set at an appropriate level; that it is applied proportionately across all sectors of the economy and, most importantly, that the revenue raised from such a tax is re-directed back to the sector to help it to fund improvements in energy efficiency and to develop more environmentally friendly products and services.

 As a sector too, we are concerned that somewhat “softer” targets such as transport and industry will provide the main focus for emissions reductions and that these sectors (including tourism) will be asked to bear a disproportionate share of any adjustment.

 The proposed inclusion of the aviation sector in the EU ETS could pose problems for Ireland. Given Ireland’s peripheral location, air access is extremely important for the country. Indeed, some 80% of all visitors to the country now arrive by air, and unlike other Member States, there are few realistic alternatives to flying for citizens and tourists travelling to and

2 from Ireland. Nonetheless, ITIC believes that the EU ETS is the most appropriate way to take account of aviation’s contribution to climate change, subject to the design of the scheme being such as to reward environmentally efficient performance. Moreover, ITIC believes that the inclusion of aviation in the EU ETS should recognise the geographical diversity and peripherality of Member States such as Ireland. These issues and policy options have the potential to have significant consequences for the Irish tourism sector. Almost all are likely to result in additional costs, which in turn will impact on the sector’s competitiveness – at a time when competition for international tourists is becoming more intense and when Ireland’s competitiveness is already deteriorating.

 It is important also to remember, that the tourism industry is global and Ireland is not just competing with travel destinations in other EU countries, but with destinations outside the EU that may not be subject to the same measures and climate change related costs.

 Within the tourism industry, the potential negative impacts of the climate change agenda on the business environment are viewed with concern. However, it is also clear there is a growing recognition that climate change may also lead to the emergence of new business opportunities.

 Ireland already has a strong brand which has strong associations with the environment and all things “green”. Given the increased consumer and corporate awareness of the impact of climate change, there may be opportunities to develop and promote the country as a carbon neutral tourism destination.

 Failte Ireland and Tourism Ireland are already actively involved in a number of initiatives to research, educate and assist the industry, and ITIC will work with them to expand and enhance the range of support measures available.

 It is also clear that many ITIC members are already embracing innovative new ways to improve the sustainability of their offering. However, it is important that the industry as a whole is encouraged to consider the opportunities that may arise in coming years, and are given the information and tools to grasp these opportunities.

 ITIC is keen to engage with Government on this important issue. We therefore seek assurances that the impact of policy measures on the sector will be fully examined and costed, and that the Government will consult with ITIC before proposals are implemented on foot of the decisions taken at EU level on the EU’s climate change package.

3 ‘Everyone talks about the weather but no one does anything about it’.

Mark Twain

Introduction

Climate change has emerged as an important issue in tourism in recent years. It has been the subject of several meetings at EU and international level and numerous published papers.1 As a result, there is now increased recognition within the global industry of the importance of climate change and the fact that its impact on tourism has to be taken seriously.

In Ireland, however, where tourism is of vital economic significance, the full impacts of climate change are not fully understood and little research has to date been undertake to examine the potential consequences for the sector, both positive and negative.23 What is clear is that the targets for the reductions in CO2 (carbon) emissions contained in the EU’s climate change/renewables package will pose significant challenges for Ireland. While the tourism sector is keen to engage with Government to ensure that we play our part in meeting these challenges, we are concerned that the sector may be asked to shoulder an inequitable share of the burden and that policy measures may be introduced without a full and thorough understanding of their economic impact on the sector.

The Importance of the Irish Tourism Sector

Ireland has become an important global tourist destination. The tourism industry and the Irish Government has worked long and hard to develop an international image and brand for the country which draws on the abundant natural resources that we have been blessed with; our history, heritage and culture and our reputation as an warm and welcoming nation. In many ways, Ireland is synonymous with the environment and all things “green”. As an industry, therefore, we recognize that it is vitally important that we do all in our power to protect our environment and work with Government to limit the impacts of climate change and to ensure that the sector develops in a sustainable manner.

1 For example, the first international conference on the subject was organised by the World Tourism Organisation in Djerba, Tunisia, from 9 to 11 April 2003. See also the Report of the Tourism Sustainability Group, European Commission, February 2007. 2 Detailed research has been completed about the impact of climate change on other tourist destinations. See for example, C. Michael Hall and James Higham, Tourism, Recreation and Climate Change, Channel View Publications, 2005 and Becken, S., and Hay, J.E., Tourism and Climate Change: Risks and Opportunities, Channel View Publications, 2007. 3 The Impact of Climate Change on Tourism in Germany, the UK and Ireland: A Simulation Study, Hamilton, J.M., and Tol, R.S.J; www.ideas.repec.org. This report concluded that climate change would reduce the number of international arrivals into Ireland, but it would then grow as tropical climates became too hot. It was also surmised that tourists would spend more time holidaying in Ireland.

4 At the same time however it is important to remember that the tourism industry is of vital economic importance to the Irish economy. It is now Ireland's largest internationally traded services sector, with the number of overseas visitors to Ireland having reached almost 8 million in 2007. It is estimated that these visitors generated almost €5 billion in foreign exchange earnings, equivalent to half the value of exports by all Irish-owned manufacturing companies. In addition, a further €1.6 billion income was generated by the domestic market, indicating that in total, the Irish tourism industry was worth an estimated €6.5 billion in 2007.4

The sector has enjoyed significant growth in recent years and has the potential for further strong growth in the future. Indeed, the Tourism Policy Review Group has set a target to increase visitor numbers to 10 million by 2012.5

Key Statistics

• 8 million out of state visits to Ireland in 2007 (83% from EU) • Over 80% of overseas visitors fly to Ireland • Domestic tourists account for a further 7.8 million visits • Irish people took 7.7 million trips abroad in 2007 – almost 90% within the EU

The 17,000 small businesses that make up Ireland’s tourism and hospitality industry also support employment for almost 250,000. Moreover, the sector is extremely important in terms of the promotion of regional development and provides employment and business opportunities in parts of the country where industry and other services are reluctant to locate.

While the sector has enjoyed enormous success in recent years, it is now facing into a far more uncertain and challenging future. Ireland’s rising cost base, sharply rising fuel prices, and adverse exchange rate movements against the Dollar and Sterling have led to a deterioration in the sector’s competitiveness, at a time when competition from other destinations is increasing. While the sector has long supported ideas of sustainable tourism development, the changes that the industry is likely to face as a result of the policy response to climate change are potentially enormous – and this will have consequences not only for the sector itself, but for the wider economy. Nevertheless, the industry is keen to engage with Government across a range of policy areas to ensure that these challenges are addressed in a constructive and positive manner and that any opportunities arising from climate change are realized.

The EU’s Climate Change Package

The publication of the last assessment report by the Intergovernmental Panel on Climate Change in 2007 moved the debate beyond the ‘if’ and ‘when’ of climate change to one of mitigation and adaptation. The most obvious manifestation of this is the Government’s commitment to an annual 3% reduction in greenhouse gas (GHG) emissions during the period 2007-2012. As part of this commitment, a series of new measures have been announced

4 Department of Arts, Sports and Tourism. 5 ‘‘New Horizons’’ Report of the Tourism Policy Review Group.

5 regarding, for example, the energy rating of buildings, an energy efficiency action plan and incentives to promote investment in renewable energy.

Overarching all of this has been the publication on 23 January 2008 by the European Commission of its Climate Change/renewable energy package; the primary policy aim is achieving a reduction in GHG emissions of 20% by 2020. The headline measures include: o Emission Trading System (ETS) emissions to be cut by 21% from 2005 levels by 2020; 6 o Non-ETS emissions to be cut by 20% from 2005 levels by 2020;7 o A further cut of 10% if global agreement reached8; o Renewables to account for 16% of final energy demand by 2020; o A 20% increase in energy efficiency to be achieved; and o A target of 10% use of biofuels in transport.

The following statistics best demonstrate Ireland’s challenge (noting that it is assumed that current GHG emission levels do not rise any further):

Emissions level Distance to Target (Mt CO2e)

1990 (base year) 55.8 Mt

Kyoto target 63 Mt

2005 emissions 69.9 Mt

2010 projection 68.4 Mt

30% reduction on 1990 base 39 Mt 16.7 Mt

60% reduction on 1990 base 22.3 Mt 33.5 Mt

At a sectoral level, Ireland’s emissions (70 Mt) can be represented thus:

6 The ETS covers Ireland’s powergen sector and heavy energy users; some 100 companies in total. Under the ETS some 14,000 operators across the EU have to have allowances equivalent to their carbon emissions. Currently these are allocated by the EPA on the base of historical and verified emission levels. If operators emit more than their allocated allowances they have to buy carbon credits on the market to cover the difference. If they produce below their allowance limit they can trade their surplus allowances. 7 The so-called ‘non-traded’ sector includes transport, agriculture, waste, industry and services and buildings. 8 It is understood that the 20% is only the start of this ‘de-carbonisation’ of the economy and wider society. The reference to a further 10% by 2020 could become part of Ireland’s target if global agreement is secured to the next United Nations climate change treaty in Copenhagen in 2009. On a longer-term horizon, GHG emission reductions of 50-60% are already under consideration for 2050, and indeed, targets of this magnitude are already legislated for in the U.K. and some Scandinavian countries.

6 Ireland GHG emissions 2005 (Mt CO 2e)

1.8 16.3 Energy 19.6 Transport Residential Industry/Services 13.3 Agriculture 12.2 7.4 Waste

In practical terms this means that Ireland’s current level of GHG emissions – some 70 million 9 tonnes of carbon (MtCO2e) – will have to be reduced by nearly 13 million tonnes by 2020 (assuming a 20% cut). Decarbonising the economy on such a scale will require significant behavioural change as was articulated by Government at the launch of a Consultation Document on Sustainable Transport.10

It is understood that any attempts by Ireland to seek a derogation from the EU targets, or postponing the timescale within which these targets have to be reached, will not be accepted by the Commission or other member states. This is primarily because Ireland is now the fifth largest global emitter of GHG emissions per capita; is one of the wealthiest economies in the EU;11 and has already failed to meet its existing commitments to reduce GHG emissions under the Kyoto Protocol.

It is also understood that the Commission has not set any targets at sectoral level, but rather it is leaving it up to each member state to decide how they manage to achieve the reductions.

As the chart above demonstrates, agriculture, energy and transport are by far the largest contributors to CO2 emissions in Ireland. As a sector, we are concerned that somewhat “softer” targets such as transport and industry will provide the main focus for emissions reductions and that these sectors will be asked to bear a disproportionate share of any adjustment. While tourism transport is likely to be captured under the transport umbrella, in reality this is likely to be a fraction of the total, as the vast majority of transport related emissions arise from routine commercial and personal activities.

9 This is shorthand for million tonnes of carbon dioxide equivalent. Some GHG such as methane are more damaging than carbon dioxide so their impact is adjusted accordingly. 10 2020 Vision – Sustainable Travel and Transport; Public Consultation Document, Department of Transport, 25th February 2008. 11 Ireland has a GDP, and GNP, per capita well above the EU average.

7 The Tourism Sector and CO2 Emissions

Emissions from tourism can be categorised under three main headings or sub-sectors, namely transportation (air, maritime, road and rail), accommodations and activities.

There is, however, no consensus in the literature about the quantum of global GHG emissions accounted for by the sector. One estimate, for example, indicates that the total CO 2 emissions attributable to tourism is around 5.3% of global emissions with approximately 90% of that total being accounted for by the transport elements of tourism.12 Other studies have found that tourism transport contributes some 7% to 8% of national GHG emissions within the EU, 13 and that tourism transport (inbound and outbound) currently accounts for 8% of total GHG emissions in the EU-15. 14 In contrast, the estimated figure for New Zealand is put at 4.6%.15

What these figures serve to highlight is the wide range of estimates of the contribution that the tourism sector makes to global emissions. Clearly, whether policy makers proceed on the basis of a figure of 5% or a figure of 8% could have major consequences for the level and scale of the emissions reductions required from the sector.

Therefore, while it is understood that the tourism sector globally is considered a ‘non-negligible’ contributor to climate change (and of course is a highly climate-sensitive sector)16, it is also clear that much greater research is needed about the true contribution made by the sector in Ireland. This research is vital if the sector is to be asked to bear “its fair share” of any emissions reduction package17 and to ensure that any policy measures imposed on the sector are proportionate.

The tourism industry in Ireland understands and acknowledges that it needs to be an active player in trying to find solutions that protect its competitive position while being part of a national cross-sector burden-sharing effort. However, as indicated above, it is essential that further research and analysis is undertaken before potentially costly policy measures are imposed on the sector – at a time when it is already struggling to remain competitive.

Moreover, it is important to note that significant progress is already taking place within the sector in seeking to improve energy efficiency and reduce emissions (e.g. Westport Woods, Inchydoney Island Lodge and Spa etc)

12 Gössling, S. (2002) Human-Environmental Relations With Tourism Annals of Tourism Research 29 (4) 539-556. 13 Research findings of the French Institute for the Environment. 14 MUSTT report, DG Enterprise, 2004. 15 Tourism, Fossil Fuel Consumption and the Impact on the Global Climate, Becken, S., and Simmons, D.G. in Hall and Higham, op cit. One trip to New Zealand generates as much carbon as 60 holidays in Scotland. 16 IPCC, Climate Change 2007: The physical science basis. Contribution to Working Group II to the Fourth Assessment Report (AR4). 2007. 17 Not surprisingly, research on transport emissions has been the main focus of attention. In contrast, there is comparably little information on the energy intensity of tourism activities at their destination. Furthermore, information on emissions from the hotel sector are also very limited, partly due to the fact that the energy use in hotels can vary considerably, both with respect to the sources of energy used as well as the amount of energy consumed.

8 Failte Ireland is actively engaged in assessing the potential impacts of climate change on the industry. ITIC welcomes the fact that Failte Ireland has commenced work on calculating the carbon footprint of the industry as well as the publication of their Review of Good Environmental Policy and Practice in the Tourism Industry and is keen to work with them to achieve its objectives.

Furthermore, the industry is also conscious that while climate change poses significant risks and challenges, it also offers potential business opportunities if the industry, with the Government’s support, can ensure that we are in a position to take advantage of them.

International Evidence on the Impact of Climate Change on Tourism

In assessing the potential impacts of climate change on the tourism sector in Ireland, both positive and negative, we have also been mindful of the findings of research undertaken internationally, as well as a number of international initiatives, because this may help to inform the development of strategy in Ireland. A number of these are summarised below. a) Impacts on Specific Attractions

International research on the impact of climate change on specific types of tourist attraction or destination indicates that the venues which are most at risk are ski resorts, coral reefs, beaches and marinas where it is anticipated either the attraction will be destroyed or the quality of the experience will be diminished (though of course the relative impact may vary from location to location leading to “winners and losers”). 18 b) Climate as a Key Resource

Climate is a vitally important resource for tourism and is an essential ingredient in the tourism product and experience. Favourable climatic conditions at tourism destinations is the number one issue for tourists, with 60% reporting that they tracked weather before travel.19 Interestingly, however, it has been found that American tourists to Europe are far less influenced by the climate when booking.20

Despite its importance, there has actually been little detailed research carried out to date on the impact of climate change on tourism, although it is known that the degree of comfort (or discomfort) experienced at a travellers’ destination is crucial.21 For example, research suggests

18 Climate Change and Australian Tourism, Sustainable Tourism Cooperative Research Centre, 2007. 19 Price was ranked in fifth place. 20 Climate and Policy Changes: Their Implications for International Tourism Flows, Mather, S., Viner, V. and Todd, G. in Hall and Higham op cit. 21 ibid

9 that the maximum acceptable daily temperature for tourism is close to 30°C.22 If this is correct, and as summer temperatures rise across the Mediterranean by perhaps as much as 10°C by the end of the Century, this will have an impact on demand for travel to destinations with more “temperate” climates. Indeed, the risk of the Mediterranean, with 120 million visitors per annum, becoming too hot for summer holidays has already been recognised.23 c) Increased Costs

As indicated earlier, it is estimated that transportation elements account for some 90% of the direct GHG emissions from the tourism sector. Air travel is a growing source of emissions and therefore, it is already the focus of much debate about the need for carbon taxes etc. However, the use of taxes alone as a means of changing behaviour or achieving environmental policy objectives is suspect, as in reality, all they appear to do is to add to costs. d) Offset Programmes

Several voluntary carbon offset products are offered to tourists whereby they can, often at a small cost, offset the carbon emissions arising from their travel. These include for example, Climate Change Scotland, a tourism industry led initiative that allows visitors to calculate their carbon footprint, arising from their stay at a hotel, event or even a visitor attraction by use of an online carbon calculator.24 A number of airlines also operate carbon offset programmes. British Airways was the first airline to introduce a voluntary passenger carbon offsetting scheme in 2005. This allows people to pay to offset the effects of their journey - contributions are automatically calculated based on the volume of carbon dioxide a specific flight produces and the cost of carbon credits per tonne at the time of booking. The money raised helps fund projects around the world that reduce the amount of carbon emitted.

As public awareness about the carbon offsetting increases, demand for such offsetting programmes is likely to increase, and therefore, the tourism sector in Ireland should investigate the possibility of introducing such programmes. e) Consumer Awareness

Tourists are becoming more conscious of the impact of travel on climate change. To date it is estimated that some 7% of passengers have bought carbon offsets. While the figure is still low,

22 Maddison, D. (2001) In Search of Warmer Climates? The Impact of Climate Change on Flows of British Tourists. Climate Change 49 (1-2), 193-208. 23 Whitfield, J. (2003) Tourist Industry Must Prepare Now For Climate Change, Nature 5 June. 24 www.climatechangescotland.com See also Visit Scotland’s promotional material on carbon neutrality and sustainable tourism: http://www.visitscotland.org/about_us/faqs/carbon_neutral.htm

10 it is rising. For example, the Travel Mole Survey (2007) found that 75% of respondents said they would be prepared to offset their travel-related emissions once they understood the impact they were having on the environment. Similarly, a survey (January 2008) by the Association of Corporate Travel Executives and corporate travel company KDS found that almost 50% of people booking business trips now feel ‘carbon guilty’ about their contribution to global warming and the US Green Hotel Association found in a survey that 43 million US travellers were concerned about green issues. It is interesting to note, that as a direct consequence of consumers’ growing awareness about environmental issues, Visit Britain is developing a sustainable tourism accreditation scheme.

Challenges for the Irish Tourism Industry

The scale of the task facing Ireland in meeting the targets set in the EU’s climate change package is enormous. ITIC recognises that the tourism sector is a contributor of CO 2 emissions and therefore it has to bear its fair share of the burden. However, as indicated earlier, it is essential that this is proportionate and based on sound evidence, not conjecture. Moreover, it is also important that any possible policy measures are subjected to a rigorous impact assessment, to ensure that any negative impacts on the sector are minimised, whilst at the same time, ensuring that any opportunities that may arise from climate change are fully recognised and grasped.

In considering the possible consequences of climate change and climate change policy for the sector, a number of issues need to be examined. These include:

 Identification of the Irish tourism sector’s contribution to carbon emissions;

 Responding to government’s plans to improve energy efficiency of buildings;

 The potential impact of Carbon taxation on the sector;

 The consequences of the inclusion of aviation within the EU ETS; and

 The identification of possible opportunities for Ireland to take advantage of climatic changes and to position itself as an environmentally sustainable destination.

Each of these issues is considered in some detail below: a) The Tourism Sector’s Contribution to Carbon Emissions – Measuring its Carbon Footprint

It is estimated that broadly speaking the sector’s carbon footprint comprises:

 Transport emissions

 Energy use in buildings

 Non-energy uses – waste

11  Energy use per activity

 Accommodation/activities

As indicated earlier, it is estimated that transport is by far the largest contributor of emissions within the sector, but of course tourism transport accounts for only a fraction of total emissions from the transport sector – it is important that this point is recognised.25

Detailed research is required to determine the carbon footprint of each of the tourism sub- sectors in Ireland to ensure that measures aimed at reducing their contributions are measured, appropriate and proportionate. ITIC therefore welcomes the fact that Failte Ireland has already commenced work on calculating the carbon footprint of the industry and has been in consultation with the D/EHLG on this issue since January 2008. b) Carbon Tax

In general ITIC is broadly supportive of the use of economic instruments or market mechanisms to achieve environmental policy objectives. However, ITIC is concerned about the possible introduction of a carbon tax and its impact on a sector that is already under significant pressure to maintain its cost competitiveness, and already having to deal with the relentless rise in fuel prices.

Therefore, ITIC would only support the introduction of a carbon tax if

 clear evidence is produced that such a tax will actually reduce emissions by a verified amount26;  the tax is set at an appropriate level;  it is applied proportionately across all sectors of the economy and,  most importantly, that the revenue raised from such a tax on the sector is re-directed back to the sector to help it to fund improvements in energy efficiency and to develop more environmentally friendly products and services.

The tourism sector would certainly not support the introduction of a carbon tax if all it achieved were higher costs for business and a windfall for the Exchequer.

It is understood that the Commission for Taxation is assessing the introduction of a carbon tax as a priority with a view to its possible inclusion in Budget 2009. However, as indicated above, it is vital that the full implications of a carbon tax for the tourism sector (together with the projected increases in electricity costs resulting from the EU’s climate change package) are quantified by Government as a priority.

25 Tourism’s Contribution to Global Environmental Change, Gossling, S. in Hall and Higham op cit. Gossling’s research estimated that tourism may contribute up to 5.3% of global GHG emissions, with transport accounting for 90% of this. 26 The rising price of fuel has, in effect, acted as a de facto carbon tax. But increase in fuel costs – equivalent to some €250/tonne have had no impact whatsoever in reducing GHG emissions.

12 c) Transport

The climate change package will have profound effects on transport not least because on a

Business As Usual basis, Irish emissions from transport are forecast to grow to 19 Mt CO 2e by 2020 – a 256% increase compared to 1990. It seems certain that all transport sectors including public transport, car rental, ferries and private cars will be impacted.

Again, ITIC would stress the need for a thorough impact assessment to be undertaken. d) Hotels and the Built Environment

It is understood that a significant energy efficiency package will be targeted by Government at the built environment. This will include hotels, tourist facilities and amenities and other accommodation. It is also understood that stricter Building Energy Ratings (BER) standards can be anticipated to improve the energy efficiency of new buildings. While in general, ITIC is supportive of these initiatives, it is important to ensure that the full costs and benefits are clearly set out before measures affecting the sector are announced. Moreover, given the location, scale and energy use of many hotels and tourist attractions, consideration should be given to providing fiscal incentives to encourage greater usage of renewable energy sources on site. e) Renewable Targets

While ITIC appreciates that greater usage of renewable energy sources will be necessary if Ireland is to meet its commitments for reducing carbon emissions, it is also important that Government is mindful of the potential impact of these facilities on the Irish land and seascape. Indeed, a review of the terrestrial wind atlas for Ireland shows a significant overlap between high value tourist areas and suitability for wind farms. It is important, therefore, that in developing its renewable policy, the impact on Ireland’s tourism industry is given sufficient consideration and weight. f) Aviation and the EU ETS

Aviation’s share of global GHG emissions is estimated to be about 3% but it is growing. As a result, the Commission has proposed that intra-EU flights (which account for 87% of total EU air traffic) should be included in the EU Emissions Trading Scheme (ETS) from 2011 – and all international flights from 2012 - on the grounds that emissions from this sector have risen by nearly 90% between 1990 and 2004.27

27 European Commission, Proposal for a Directive of the European Parliament and of the Council amending Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas allowance trading within the Community, COM (2006) 818 final, 20 December 2006. See also a Commission Communication on Reducing the Climate Change Impact of Aviation which included an impact assessment which evaluated different policy options, September 2005, COM (2005) 459.

13 The proposed inclusion of the aviation sector in the EU ETS could pose problems for Ireland. Given Ireland’s peripheral location, air access is extremely important for the country. Indeed, some 80% of all visitors to the country now arrive by air, and unlike other Member States, there are few realistic alternatives to flying for citizens and tourists travelling to and from Ireland.

ITIC strongly supports the view taken by the Irish Government, which states that the inclusion of aviation in the ETS should recognise the geographical diversity and peripherality of EU Member States such as Ireland, and recognize that a “one cap fits all” approach will not succeed. 28

In addition, ITIC agrees that the proposal should not endanger the diversity of air services, which are now available, or reduce access to air services.

It is also important to recognize that we are fortunate in having two of the world's most efficient air carriers located in Ireland, who have both committed huge investments in ensuring that their fleets of aircraft are 'young', efficient and eco-friendly. The industry is concerned that the imposition of a carbon tax on top of incredibly expensive fuel could adversely impact this sector as we know it. There is also concern that consolidation of carriers (well underway in the US) could mean the loss of many air services into Ireland, with consequent damage to the tourism sector. The industry strongly believes that taxing alone is not the way forward; technology development is.29 The record of the aviation sector in this area has been superb, and their stated objectives for further improvements are impressive. ITIC therefore stresses the fact that it would be wholly unfair to introduce a system whereby there would be a ' one cap fits all ' for the Aviation sector, which takes no account of the improvements which some airlines have already made in regard to the efficiency/age of airline fleets.

Moreover, ITIC strongly believes that immediate savings in aviation emissions could be achieved through better management of air space and coordination of routes to ensure that aircraft avail of the most efficient routings and are not subject to in-flight delays or diversions. A 30 Single European Sky could save 12 mn tonnes of CO2 at a stroke. g) Summary

These issues and policy options have the potential to have significant consequences for the Irish tourism sector. Almost all are likely to result in additional costs, which in turn will impact on the sector’s competitiveness – at a time when competition for international tourists is becoming more intense and when Ireland’s competitiveness is already deteriorating.

While these challenges are not unique to Ireland’s tourism industry, what is unique is our peripheral location and our very heavy reliance on air travel compared with other EU Member States.

28 As set out in the Department of Transport’s Consultative Document “2020 Vision: Sustainable Travel and Transport” 29 See for example, http://www.iata.org/pressroom/speeches/2008-04-21-01 in which IATA has set it members the following targets: 10% alternative fuels by 2017 and more importantly a 25% improvement in fuel efficiency by 2020 compared to 2005. 30 IATA

14 Moreover, it is important to remember, that the tourism industry is global and Ireland is not just competing with travel destinations within the EU, but with destinations outside the EU that may not be subject to the same measures and climate change related costs.

Potential Opportunities

Within the tourism industry, the potential negative impacts of the climate change agenda on the business environment are certainly viewed with concern. However, at the same time, it is also evident there is a growing recognition that climate change may also lead to the emergence of new business opportunities.

It is now recognised that climate change will not affect all tourist regions in the same way. For example, as indicated earlier, the Mediterranean region has already been identified as a climate change ‘hot spot’, amid concerns that climatic conditions similar to that of North Africa will develop, and with water shortage becoming a critical problem. While this is obviously a major issue for the Mediterranean region, it does mean that other regions with more temperate climates - including Ireland - will become more attractive as tourist destinations.

Ireland already has a very strong brand with very strong associations with the environment and all things “green”. Given the increased consumer and corporate awareness of the impact of climate change and the need to reduce their carbon footprints, there may be opportunities to develop more ‘carbon neutral’ product offerings in order to attract this type of business or to promote the country as carbon neutral tourism destination.

Failte Ireland and Tourism Ireland are already actively involved in a number of initiatives to research, educate and assist the industry in developing more environmentally friendly “products” and ITIC will work with them to expand and enhance the range of support measures available. It is also clear that many ITIC members are already embracing innovative new ways to improve the sustainability of their offering. However, it is important that the industry as a whole is encouraged to consider the opportunities that may arise in the coming years and are given the information and tools to grasp these opportunities. Part of this education process, involves learning from national and international best practice.

Learning from National and International Best Practice

It is clear that both nationally and internationally a number of interesting and important initiatives are being taken within the tourism sector. As referenced earlier, Visit Scotland is taking a leadership role in promoting the carbon agenda and sustainable tourism practices. The US Renewable Energy in Tourism Initiative is also of interest as they promote best practice manuals targeted at tourism sectors. 31

ITIC is committed to reviewing examples of best practice internationally as a way to encourage its members to reduce their carbon footprint.

31 http://www.renewabletourism.org/

INCHYDONEY ISLAND LODGE AND SPA Hotels and spa centres are energy-intensive. With this in mind the Inchydoney Island Lodge and Spa installed what was then the largest array of solar panels in the country (80 square metres), a wood pellet heating system and some heat exchangers. These projects reduced the hotel’s carbon footprint by some 495 tonnes per annum. This carbon reduction programme won the hotel the Sustainable Energy Ireland award for best renewable energy project in 2007.

METRO TORONTO CONVENTION CENTRE The MTCC is the first convention centre in Canada to offer green electricity to clients and event planners to help them reduce the carbon footprint of their events.

RENTAL CAR CARBON OFFSETTING In the US, Enterprise rent-A-Car, National Car rental and Alamo rent A car have introduced a customer carbon offset programme. It costs just $1.25 per rental to fund certified offset projects that reduce carbon emissions. The companies have agreed to match their customers’ contributions.

FLYING LIGHT In July 2007, KLM announced plans to achieve carbon neutral growth by modernizing its fleet, reducing its fuel use and offsetting 4Mt of carbon over four years through investments in WWF sustainable energy schemes. Netjets, one of Europe’s largest private jet companies, has set itself the goal of becoming completely carbon neutral by 2012. Virgin Airway’s Sir Richard Branson is ploughing his profits into R&D to develop sustainable sources of energy. IATA (International Air Transport Association) reports that airlines improved their fuel efficiency by 5% from 2003-2005. They are projecting at least a further 25% improvement between 2006 and 2020. In the longer term, technology is expected to lead to the development of a zero-rated carbon emission aircraft within 50 years.

THE ICARUS PROJET (www.itm.org.uk/icarus/) This project is the initiative of the Institute of Travel Management and was established to promote carbon reduction in travel throughout the entire UK business travel industry. It is targeted at, and led by travel buyers/managers. It was conceived by ITM in 2006 because leading industry figures wanted to make a practical contribution to reducing GHG emissions. A toolkit is provided to buyers to help implement a Carbon Reduction Programme; a system of accreditation is in place; and annual awards are given. The project gets support from the Omega Fund (www.omega.mmu.ac.uk), which is sponsored by the UK’s Higher Educational Funding Council.

INTERNATIONAL TOURISM PARTNERSHIP (www.tourismpartnership.org) In response to the new set of ‘Going Green’ standards published in 2007 by the ITP, the organization has provided practical advice on minimum standards for a sustainable hotel, covering policies and frameworks, staff training and awareness, environmental

16 management, purchasing, people and communities and destination protection. A magazine provides regular up-dates. Specific guidelines were published about sustainable hotel design and development. Over a dozen major operators have signed up, including Four Seasons, Hilton, Hyatt, InterContinental, Marriott and Starwood.

17 Conclusions and Key Messages

Climate is a key resource for tourism and the sector is highly sensitive to the impacts of climate change and global warming. Davos Declaration (October 2007)

Business must become green to grow and to do this it is necessary to include climate change policies into corporate DNA. CBI, November 2007

ITIC is conscious of the scale of the problem facing Ireland in meeting its commitments to reduce GHG emissions and appreciates the strategic significance of the EU’s climate change package which has been compared to monetary union in terms of its importance. Indeed, in many respects, carbon has become a new currency.

It is clear that policy measures aimed at tacking climate change will pose significant challenges for the Irish tourism sector in coming years. This is particularly so given our peripheral location and the heavy reliance of travellers to and from the country on air travel.

The industry is keen to work with Government to address emissions from the sector, but it is vital that the sector is not asked to bear a dis-proportionate share of the burden. It is important, therefore, that full consideration is given to the impacts of any proposed policy measures on the sector to ensure that tourism, which is vital to the economic well being of the whole economy, is not damaged.

ITIC also recognises that sustainable tourism is clearly the way forward and that climate change can also offer significant opportunities to grow and develop a more carbon neutral product offering.32 However, this will require a more strategic approach and the collaboration of all stakeholders to ensure that Ireland can position itself to take advantage of these opportunities going forward.

ITIC is pleased that Failte Ireland has been actively engaged in this area and will work with them, and with Tourism Ireland, to explore how our tourism product could build on its green image to become a destination of choice for tourists wishing to visit a country whose tourism sector is fully committed to becoming carbon neutral in line with Ireland’s EU commitments.

ITIC has some concerns about the proposed introduction of carbon taxes and their impact on a sector that is already struggling to maintain cost competitiveness in the face of sharply rising fuel prices. ITIC would support the introduction of such a tax only if it was proportionate, and most importantly, only if revenues raised from the tax were channelled back to businesses to help them to invest in more energy efficient accommodation and facilities. To this end, ITIC wishes to explore with SEI and other State agencies how any revenue collected from a

32 A point of view shared by the UNWTO/Tourism Sustainability Group.

18 carbon tax and the auctioning of permits could be used to assist the sector to reduce its carbon footprint.

In this context too, and in cooperation with SEI and Failte Ireland, ITIC and its members are keen to investigate the options for developing carbon offset products that could be used at operator level.

ITIC is fully committed to working with Government to ensure that the tourism sector is not just part of the problem, but part of the solution. To this end, ITIC is prepared to undertake the following initiatives:

 Work with Failte Ireland and Tourism Ireland to analyse the results of the research which is currently being undertaken into consumers’ perceptions and concerns about climate change.

 Ensure that all ITIC members are aware of the Failte Ireland document “Good Environmental Policy and Practice in the Tourism Industry”. ITIC will work closely with Failte Ireland and SEI to see if there are other initiatives that could be taken to improve the energy efficiency of the Irish tourism sector.

 ITIC will fully support Failte Ireland in relation to its research to quantify the sector’s carbon footprint.

 ITIC will engage with the Department of Arts, Sports and Tourism to ensure that the national response on climate takes account of special situation of tourism sector.

ITIC is keen to engage with Government on this important issue. We therefore seek assurances from Government that the impact of policy measures on the sector will be fully examined and costed and that the Government will consult with ITIC before proposals are implemented on foot of the decisions taken at EU level on the EU’s climate change package.